Woodies CCI Vegas Trade (VT) Pattern:

The Vegas Trade Pattern is a combination of several things. First it needs the hook from extreme (HFE) CCI pattern and then a set of CCI bars shaped into a partial circular or rounding pattern following that. These rounding bars must be at least 3 bars minimum and can occur toward the zero-line or against it. In other words the rounding can be in any direction regardless of what side of the zero-line (ZL) the entire pattern is being formed on. However, the entire VT pattern must form on the same side of the zero-line.

This means that the swing high/low part of the pattern doesn’t have to be the rounding part of the pattern. However, it is a stronger signal when the swing high/low is the rounded part. Also, it can even have two or more swing high/lows as well. The rounding is very important to the overall pattern and indicates a struggle that may well lead to a strong trend reversal.

That last part of the pattern is the trend line drawn straight across from the recent swing high or low. A break of this swing high/low is our entry into the trade.

The entire Vegas Trade pattern can have anywhere from around 8 to 12+ bars but when it gets too far spread out past that before an entry signal is seen then the probability of success is lowered and the strength of move could be less.

The Vegas Trade pattern indicates a potential for a very strong change in the trend.

Also, Woodie strongly recommends the use of the 25-lsma indicator as an additional criterion for VT entry. When the 25-lsma indicator shows that price is on the side of the direction of the VT entry then there is a greater likelihood that the trade will be successful. LSMA stands for Least Squares Moving Average and can also be found in some charting packages as Linear Regression Curve.

In other words, if the VT is setting up for a long entry then you want price to be above the 25-lsma indicator and, if possible, you also want the 25-lsma to be pointing in the upward direction as well. If a VT short is setting up then you want the price to be below the 25-lsma and, if possible, you want the 25-lsma to be pointing downward. Since we do not use prices to trade Woodies CCI system it is recommended that you do not view prices just to see a 25-lsma indicator. Rather, use a 25-lsma indicator placed in the CCI region that displays colors showing these four conditions.

The VT Trade is a counter-trend trade. New students of Woodies CCI should not be taking this type of trade. However, keep your eye on it and learn as you progress.



Chart 1 Chart 2 Chart 3

3 Charts Above – Vegas Trade Pattern.

The yellow lines show the CCI pattern. Specifically the yellow lines show the hook from extreme, the second pullback and the swing low/high trend line. The single white lines show where the entry would be and the double white lines show where the exit would be.

Chart 1 shows very limited rounding. Neither the swing high after the HFE nor the swing low after that shows very good rounding. It has 3 bars of rounding minimum so it’s still valid. However, be careful as it could likely fail as a result of that. It may be best to stay away from this trade since it does not have the good rounding expected. There will be many other vegas trade (VT) patterns that could be taken so passing on a lame one won’t hurt.

All CCI patterns can’t be perfect but keep in mind that the closer the pattern conforms to the definition the great the likelihood that it will be successful.

Chart 2 shows rounding on the swing low and the swing high. The entry signal is still the break of the swing low since it is above the zero-line. Notice that the entire pattern is more than 12 bars so the probability for success is far less.

Chart 3 shows very nice rounding after the HFE pattern. The best Vegas Trade patterns have the swing high/low part as the rounding section. It also shows an interesting sharp flip of the CCI bar downward that happens next and breaks the swing low. Since it broke the recent swing low, in this case, it gives us our CCI entry signal to take the trade.

Remember that you will want to only take trades where the 25-lsma indicator shows that prices are on the side of the trade and, if possible, the 25-lsma indicator also is pointing toward the direction of the trade. The 25-lsma indicator is not shown in these charts. If it were shown you would see it located on the zero-line in the CCI section using a multi-color indicator to display it.

The exit signals are the same as in any other trade. Go review the section on how to enter and exit trades.

It is very important to remember that when you take one of these trades it does not mean you are supposed to stay in it forever. Always follow Woodies CCI exit signals.